With the Congressional appropriations process grinding to a halt in the House and the future of FY 2009 appropriations bills in doubt, Democratic leaders announced ($) last week that they absolutely intend to pass one appropriations bill before the start of the fiscal year on Oct. 1 - the Defense Department appropriations bill. Speaker of the House Nancy Pelosi (D-CA) said that she knows the bill will be passed because, "that is our responsibility." Apparently she doesn't feel the same responsibility to pass the other 11 appropriations bills on time. Hmmmm.....

The White House also wants to the bill to be passed before Congress leaves town for the elections this fall. According to this CQ story, not passing the bill will cause problems:

The White House and the Pentagon badly want the Defense bill enacted before Congress leaves so the department does not have to deal with the planning and accounting problems associated with not having its full budget in place at the start of the fiscal year.

Unfortunately, the White House doesn't appear to have any concerns about the "planning and accounting problems" all the other federal agencies will inevitably experience if and when Congress fails to enact those appropriations bills. Looks like for both the Democratic Congress and the White House, defense funding is the only game in town. I guess educating, feeding, housing, and giving people health care just isn't that sexy anymore.

Well, at least we aren't experiencing an economic downturn that is putting pressure on average Americans and their economic well-being. Yes, thank goodness for that.

The office in charge of overseeing employment practices of the Executive is a complete mess.

We noted last week that Office of Special Counsel Deputy James Byrne was resigning from his office to protest the way the OSC has been managed by its embattled chief Scott Bloch. Today, CongressDaily AM ($) reports that it has obtained a copy of Byrne's resignation letter.

"Upon my departure, I am obligated to note that the mission, independence and very existence of the Office of Special Counsel are -- and shall remain -- at risk unless and until this agency is afforded a presidentially-appointed, senate-confirmed leader who is capable of putting OSC's mission and OSC's people ahead of political agendas and personal vendettas," Byrne wrote.

CongressDaily's story also goes on to note that morale in the office has been drained and OSC employees are rebelling against Bloch. The story also indicates that other White House agencies are ignoring requests from Bloch's office, which oversees the Executive, to cooperate with investigations, because Bloch's credibility is completely shot.

And, In a letter urging White House Chief of Staff Josh Bolten to fire Bloch, Project on Government Oversight details how Bloch's conduct is hampering his staff's ability to function as an organization:

• Witnesses who are being requested to provide evidence of wrongdoing against Bloch are still supervised by Bloch.
• Bloch's attorney may depose employees, further hindering staff to effectively communicate with their boss.
• Congress is refusing to move OSC's reauthorization legislation until Bloch resigns or is fired

The CBO has released a report detailing the effects of indexing the the AMT to inflation (i.e. "patching" it so that fewer households would pay it than otherwise anticipated) and extending the 2001-2003 Bush tax cuts without offsetting the revenue loss.

If the Bush tax cuts are allowed to expire and if the AMT continues its ever-deepening reach into the middle class, the federal debt held by the public will increase from today's 37 percent of GDP to 115 percent in 2050. If AMT is indexed for inflation to limit its impact on the middle class, that debt figure becomes 115 percent in 2050. If the AMT is indexed for inflation and the Bush tax cuts are extended, federal debt held by the public jumps to 190 percent in 2050.

Deficit financing of these tax cuts has a pernicious effect, reducing per capita income by 13 percent in 2050. But, "[b]eyond 2073, projected deficits under those tax policies would become so large and unsustainable that CBO's model cannot calculate their effects."

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CBO: Long-Term Effects of Indexing the Alternative Minimum Tax and Extending the Tax Reductions of 2001 and 2003

The Bureau of Labor Statistics has issued a pair of data sets indicating that workers are still not seeing real (i.e. inflation adjusted) increases in pay.

Yesterday's Real Earnings report, based on data from the payroll reports of private nonfarm establishments of earnings of both full-time and part-time workers holding production or nonsupervisory jobs, shows:

Real average weekly earnings fell by 0.9 percent from May to June after seasonal adjustment...Average weekly earnings rose by 2.8 percent, seasonally adjusted, from June 2007 to June 2008. After [adjusting for inflation], average weekly earnings decreased by 2.4 percent.

Today's release of data on full-time workers, based on a "survey of households in which respondents are asked, among other things, how much each wage and salary worker usually earns," also reflects a weak economy:

Median weekly earnings of the nation's 107.1 million full-time wage and salary workers were $719 in the second quarter of 2008....This was 4.2 percent higher than a year earlier, compared with a gain of 4.4 percent in the Consumer Price Index for All Urban Consumers (CPI-U) [i.e. inflation] over the same period.

Senate Minority Leader Mitch McConnell (R-KY), Senate Finance Committee ranking member Charles Grassley (R-IA), and a pair of their caucus members are promulgating ($) new language on legislation that would extend a bevy of tax cuts for another year (collectively known as "extenders") and a one-year AMT patch. The total cost of the bill would be $130 billion; the AMT portion of the measure is about $62 billion.

The language would partially offset the revenue loss with unspecified "spending reductions and appropriate revenue raisers for new tax relief policy." Not exactly something to pin all your fiscal responsibility dreams on, but consider this is a step forward for Republicans who are generally allergic to shifting the tax burden from one group to another (usually wealthy) group. Although, credit should also be given to Congress members who found a loophole so politically repugnant, that the staunchest of revenue-phobes ([cough] McConnell [cough]) would have a difficult time explaining a "no" vote.

The provision in question closes a loophole by which special taxpayers -- like hedge fund managers -- use offshore tax havens to shelter income. Grassley explains the loophole quite well:

So, if a teacher donated his or her entire salary to a charity, he or she would only be able to claim about half of that as a deduction. Meanwhile, a hedge fund manager who sheltered income in the Grand Caymans would be allowed to claim a deduction for the entire amount of his or her sheltered income.

A second stimulus package may be in the works. Yesterday, CQ Politics reported that Senate Appropriations Chair Robert Byrd (D-WV) may announce on Thursday that his committee will markup another stimulus package.

"The need seems to be apparent," Hoyer told reporters after joining Speaker Nancy Pelosi , D-Calif., and other Democratic House leaders in a two-hour meeting with private-sector economists. "All the economists we talked to today indicated that additional action is needed," he added.

Hoyer said the package would include elements already widely discussed — more infrastructure funding, heating assistance for low-income Americans, more money for food stamps and for state Medicaid programs. Pelosi said the proposal also could include another round of rebates for taxpayers, but she made no commitments.

President Bush today:

The growth [of the economy] is lower than we would have liked, but it was growth nonetheless.

GDP is not the only thing that is growing.

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If signed into law, the FY 2009 Financial Services and General Government Appropriations bill approved by the Senate Appropriations Committee would stop the Executive from joining the race to the bottom for cheap labor.

The Senate panel passed the one-year moratorium on public-private job competitions on Thursday as part of the $44.8 billion fiscal 2009 Financial Services and General Government Appropriations bill. The provision essentially would leave it to the next presidential administration to continue the program, which opens jobs that traditionally have been performed by federal employees to bids from contractors.

The House Appropriations Committee passed an identical measure last month when it considered the spending bill. The House version of the fiscal 2009 Defense Department Authorization bill goes even further, banning all new public-private competitions conducted under the rules in the Office of Management and Budget's Circular A-76 for three years.

The fact is, the only "advantage" that competitive sourcing has over government provision of services is that private contractors create lower-paying paying jobs with no health care coverage or retirement benefits to carry out government functions. So, sure, the government could theoretically save a few bucks from competitive outsourcing, but the savings are extracted from the public it serves by shredding thousands of good jobs.

The Center on Budget and Policy Priorities has once again released an analysis of state government budget health, and the news continues to deteriorate. In their lastest analysis, they rank all 50 states according to changes in three main economic indicators - employment, poverty, and housing foreclosures. The report finds:

States across the country have projected budget shortfalls totaling at least $48 billion for 2009. To meet their balanced budget requirements, they are being forced to raise taxes and/or cut expenditures — both of which reduce overall demand and thereby weaken the impact of the recent federal stimulus package. Federal fiscal relief would limit the need for such actions.